Dodd-Frank rollback raises the asset threshold for systemic financial institutions from $50 billion to $250 billion.

Peter Prince

2018-05-21 07:39:00 Mon ET

Dodd-Frank rollback raises the asset threshold for systemically important financial institutions (SIFIs) from $50 billion to $250 billion. This legislative change exempts some banks from annual stress tests and living wills that the Obama administration designed as a safety valve to prevent another major financial calamity. As a result, this structural regime switch will provide smaller financial institutions with primary relief from the strict rules and regulations that apply to most Wall Street banks.

President Trump affirms his clear intention to sign this bill into law. The Dodd-Frank rollback tends to benefit non-systemic financial institutions, community banks, and other small lenders. However, Congress expresses the consensus view that most banks should be subject to substantially higher core equity capital requirements to safeguard against extreme losses in rare times of financial stress.

As financial intermediary capital covaries with both aggregate credit supply and household debt fluctuations, these ebbs and flows cause real business cycles and financial market fluctuations. Sticky prices and interest rates can persist over the interim period, and transitional dynamism manifests in real macro movements such as real GDP expansion, employment, capital investment, industrial production, and bank balance sheet expansion.

 


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Treasury Secretary Steve Mnuchin indicates that the Trump team puts the trade war with China on hold.

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Treasury Secretary Steve Mnuchin indicates that the Trump team puts the trade war with China on hold.

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AYA finbuzz podcast offers fresh insights into the latest stock market topics, economic trends, and personal finance inspirations as of December 2019.

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Former White House chief economic advisor Nouriel Roubini discusses the major limits of central-bank-driven fiscal deficits.

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Warren Buffett warns that the current cap ratio of U.S. stock market capitalization to real GDP seems to be much higher than the long-run average benchmark.

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Nobel Laureate Joseph Stiglitz maintains that globalization only works for a few elite groups.

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2019-08-09 18:35:00 Friday ET

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Just Capital issues a new report in support of the stakeholder value proposition in recent times.

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2018-06-05 07:36:00 Tuesday ET

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